01

Determinants of Brand Loyalty for

The Various Car Brands
Ms. Rushina Singhi*
Ms. Shanu Gupta**

ABSTRACT
In the present scenario there is the growing need to understand the markets from the perspective of a marketer.
Thinking in the same line, the present study underlines the determinants of brand loyalty that helps marketer look for
a potential target market. The study undertook the current brands in the automobile sector for study, to gain an
insight into the minds of its customers.

Consistent growth and dedication have made the Indian automobile industry the second- largest tractor and two-
wheeler manufacturer in the world. The Indian automobile market is among the largest in Asia.

The key players like Hyundai, Maruti, Tata Motors, Hero Motors, etc, have been considered as the likely brand bases
to get answers from the target customers and the factors affecting their brand preferences.

Introduction after year. By late-90's the industry reached self

The Indian economy has grown at an annual rate
of more than 8% over the last five years and the
industrial production has made an outstanding
contribution to this growth. Auto industry was
licensed, controlled and restricted in the early
years of independent India and had a limited
contribution to the economy. The industry
currently contributes about 5% of the GDP and it
is targeted to grow five fold by 2016 and account
for over 10% of India’s GDP.
Over a period of more than two decades the
Indian Automobile industry has been driving its
own growth through phases. The entry of Suzuki
Corporation in Indian passenger car
manufacturing is often pointed as the first sign of
India turning to a market economy. Since then the
automobile sector witnessed rapid growth year
reliance in engine and component manufacturing
from the status of large scale importer.
With the Indian middle class earning higher per
capita income, more people are ready to own
private vehicles including cars and two-wheelers.
Product movements and manned services have
boosted in the sales of medium and sized
commercial vehicles for passenger and goods
transport. Side by side with fresh vehicle sales
growth, the automotive components sector has
witnessed big growth. The domestic auto
components consumption has crossed rupees
9000 crores and an export of one half size of this
figure.
The key players in the automobile industry are-
Hyundai motors, maruti Suzuki, honda motors,

*Lecturer, Amity Business School, Amity University, Noida, UP.

**Student, Amity Business School, Amity University, Noida, UP.
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Toyota motors, ford motors, etc. The Indian
automobile industry is going through a phase of
rapid change and high growth. With new projects
coming up on a regular basis, the industry is
undergoing technological change. The major
players are expanding their plants and focusing
on mass customization, mass production, etc
The Government of India has liberalized the
foreign exchange and equity regulations and has
also reduced the tariff on imports, contributing
significantly to the growth of the sector. Having
firmly established its presence in the domestic
markets, the Indian automobile sector is now
penetrating the international arena. Vehicle
exports from India are at their highest levels.
Literature Review
Various perspectives of brand loyalty have been
studied by many marketers and researchers.
Contributions of academicians towards brand
loyalty are discussed below :
1. Tucker (1964) reported that there was growth
of brand loyalty even in a setting where there
was no prior consumer's knowledge about
any of the available brands.
2. Frank (1967) reviewed brand loyalty and
concluded that the results of brand loyalty is
not encouraging and the responses of loyal
buyers were found to be significantly
different from those of non-loyal buyers to
new brands being tried.
3. Livesey (1973) examined the concept of brand
loyalty with regard to the television rental
market. He investigated the underlying
determinants of consumer behaviour in order
to ascertain the market better. Finally, he
concluded that the determinants of brand
loyalty could be an important factor in
relation to facing competition for marketers in
service industry.
4. Jacoby and Kyner (1973) viewed brand loyalty
as a multidimensional construct involving
attitudinal components and as a subset of
repeat purchase behaviour.
5. Jacoby and Chestnut (1978) used the terms
'stochastic' and 'deterministic' to label the
alternative views of cognitive and
behavioural brand loyalties.
6. Brand loyalty is the strength of the
relationship between the relative attitude
towards a brand and patronage behavior
(Dick and Basu, 1994).
7. A consumer's attitude towards a brand is a
multidimensional construct that relies upon
an affective, cognitive and conative
component (Oliver, 1999). The cognitive
component refers to particular knowledge
about that brand. The affective component is
concerned with (positive/negative) emotions
that consumers have toward the brand. The
conative component embeds consumers'
behavioural disposition or an intention to buy
the brand.
8. Dr. Kanwal kapil on his paper on the
determinants of customer loyalty in the
telecom sector sais that there are three
distinctive approaches to measure consumer
loyalty :
• Behavioral measurements
• Attitudinal measurement
• Composite measurements
The research made on telecom industry analyzed
that the customer loyalty of hutch customers
depends on the following factors :
1. Brand trust
2. Brand name
3. Socio psychological factors
4. Brand parity
The likeliness of a consumer to be satisfied with
his products increases if the product has a good
brand name. Hence, efforts to make the product
popular also contribute to customer satisfaction.
Brand loyalty which is one of the most important
aspects for the organization, is weakly affected by
brand trust, brand parity, socio logical change and
brand name. Hence the company should put in
efforts in these directions if they want to increase
brand loyalty.
Objectives
The study aims to find out the various
determinants of brand loyalty among consumers
when they think of purchasing a car brand. Hence
the objective of the study is :
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1. To know what makes the customer loyal to a To identify the measurement variables, the KMO
particular brand? and Barlett test was carried out for exploratory
2. What are the factors which must be factor analyses for all latent variables. The KMO
considered while launching a new brand? measure of sampling adequacy is a statistic which
3. To what extent should a marketer consider indicates the proportion of variance in your
consumer preferences? variables which is common variance, i.e. which
4. To know the essentials for remaining might be caused by underlying factors The factor
competitive in the car market? analysis is done to test the reliability of the
questionnaire made. The questionnaire consisted
Research Methodology of 20 factors to be tested. The table below shows
The topic of the research is determinants of brand the KMO and barlett test of sphericity :
loyalty of cars in the automobile sector. After
deciding on to conduct survey of 300 respondents KMO and Bartlett's Test (table1)
only 250 respondents could be contacted. A Kaiser-Meyer-OlkinMeasureofSamplingAdequacy.
.567
questionnaire was prepared consisting of closed
Bartlett'sTestofSphericity Approx.Chi -Square 1139.855
ended questions and 5 point scale used to test the Df 190
variables affecting the study. The respondents Sig. .000
were contacted directly and through mails. The The following tables show the factor analysis conducted:
data analysis was conducted using :
• Kaiser-Meyer-Olkin(KMO) and Barlett test
• Factor analysis
Communalities (table2)
Initial Extraction
popularityofthebrand 1.000 .673
A fter saleservices 1.000 .435
positive behavior of 1.000 .702
employees
A ffordability 1.000 .599
commencementyearofthe 1.000 .570
brand
frequencyininnovations 1.000 .623
Designandmodel 1.000 .589
A dvertisement 1.000 .681
M ileage 1.000 .644
pick -up/speed 1.000 .617
maintenance cost 1.000 .635
servicestation 1.000 .824
easeoflocationofthecar 1.000 .648
Familysize 1.000 .642
interiordesigningofthecar 1.000 .589

carloanavailability 1.000 .543

economicrecession 1.000 .669
trustinbrandloyalty 1.000 .536
uni quefeatureofabrand 1.000 .626
similarcaravailableatlower 1.000 .627
costby other brand

Extraction Method: Principal Component Analysis.

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Total Variance Explained (table 3)

Comp ExtractionSumsofSquared RotationSumsofSquared

onent InitialEigen values Loadings Loadings
Total %of Cumulative %of Cumulative %of Cumulative
Variance % Total Variance % Total Variance %
1 3.29
16.496 16.496 3.299 16.496 16.496 2.051 10.255 10.255
9
2 2.02
10.146 26.642 2.029 10.146 26.642 1.960 9.798 20.053
9
3 1.83
9.163 35.805 1.833 9.163 35.805 1.842 9.208 29.261
3
4 1.64
8.203 44.007 1.641 8.203 44.007 1.760 8.799 38.060
1
5 1.37
6.860 50.867 1.372 6.860 50.867 1.759 8.797 46.857
2
6 1.23
6.183 57.050 1.237 6.183 57.050 1.553 7.765 54.622
7
7 1.06
5.305 62.355 1.061 5.305 62.355 1.547 7.733 62.355
1
8 .971 4.853 67.208
9 .941 4.705 71.913
10 .804 4.019 75.932
11 .778 3.889 79.821
12 .662 3.311 83.132
13 .634 3.171 86.302
14 .557 2.786 89.088
15 .522 2.609 91.698
16 .481 2.407 94.104
17 .363 1.816 95.920
18 .306 1.528 97.448
19 .273 1.363 98.811
20 .238 1.189 100.000
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Component Matrix (table 4)

Component
1 2 3 4 5 6 7
popularityofthe
.086 -.126 .618 .297 .222 -.352 -.077
brand
Aftersaleservices .271 .288 .078 -.171 -.442 -.034 .215
positivebehaviour
.342 -.063 .563 .072 .014 .411 .300
ofemployees
A ffordability .487 .320 .051 -.287 .217 -.061 -.351
commencement
.572 -.323 .234 -.116 -.166 -.207 -.003
yearofthebrand
frequencyin
.486 -.090 -.018 .210 -.374 .003 .440
innovations
Designandmodel .412 .542 -.094 .094 .115 -.019 .308
A dvertisement .251 -.139 .622 .339 .205 .133 -.192
M ileage .429 .478 .071 -.039 .010 .386 -.275
pick -up/speed .422 .312 .172 -.447 -.253 .105 -.193
maintenancecost .588 -.160 -.039 -.432 -.217 -.141 -.094
servicestation .549 -.213 -.182 -.363 .429 -.328 .146
easeoflocationof
.453 -.436 -.206 -.088 .400 -.111 .171
thecar
Familysize .451 -.174 -.414 .109 .243 .407 .031
interior designing of
.300 .396 -.211 .280 .383 .224 .148
thecar
carloanavailability .426 -.275 -.184 .434 -.188 .117 -.122
economicrecession .488 -.088 -.146 .475 -.354 -.219 -.063
trustinbrand
.371 .100 -.137 .372 .007 -.207 -.434
loyalty
unique featureofa
.035 .503 .402 .028 .187 -.326 .261
brand
similarcaravailable
atlowercostby .047 -.527 .334 -.288 .030 .389 -.013
otherbrand

Extraction Method: Principal Component Analysis.

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Rotated component matrix (table5)

Component
1 2 3 4 5 6 7
popularityofthe
.109 -.125 .558 -.142 .223 -.498 -.127
brand
A fter saleservices -.092 .316 -.102 .014 -.026 -.131 .546
positive behavior of
.002 .098 .708 .161 -.191 .062 .352
employees
A ffordability .258 .662 .029 .187 .120 -.125 -.166
commencement
.436 .230 .283 -.271 .245 -.020 .336
yearofthebrand
frequency in
.143 -.074 .111 .118 .225 .084 .716
innovations
Designandmodel .090 .203 -.075 .626 .055 -.233 .292
A dvertisement -.019 .054 .778 .017 .215 -.104 -.121
M ileage -.171 .632 .160 .406 .104 .120 .006
pick -up/speed .009 .748 .020 -.040 -.062 -.022 .227
maintenance cost .460 .496 -.048 -.237 .117 .111 .304
servicestation .884 .160 -.065 .099 -.007 -.059 .005
easeoflocationof
.758 -.110 .094 .102 .074 .192 -.001
thecar
Familysize .325 .032 .053 .418 .150 .579 .011
interiordesigning
.060 .042 .035 .755 .099 .035 -.039
ofthecar
carloanavailability .081 -.069 .158 .061 .570 .372 .199
economicrecession .068 -.026 .016 .027 .721 .042 .375
trustinbrand
.047 .181 -.002 .125 .682 -.039 -.140
loyalty
uni quefeatureofa
-.024 .081 .127 .271 -.130 -.710 .092
brand
similar car available
atlowercostby .160 .056 .477 -.343 -.326 .384 -.002
other brand

Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.
A Rotation converged in 34 iterations.

Interpretition
Before conducting factor analysis it is necessary to
test whether the data is significant enough for the
factor analysis. KMO and Barlett test are such
initial tests to know the appropriateness of factor
analysis. High values (between .05 and 1.0)
indicate factor analysis is appropriate. Values
below 0.5 imply that factor analysis may not be
appropriate. The measure of sample adequacy is
greater than .05, that is, .567 (from table 1) which
shows that indicated variables are fitting perfectly
with the structure of the other variables. From the
barlett test we can say that there is a large value of
chi-square of 1139.855 (table 1), thus the null can
be rejected and factor analysis deemed to be
appropriate as a consequence. Also the
significance level is less than .05 which verifies
that the data is suitable for factor analysis and
there are significant relationships between the
variables.
The output of factor analysis is obtained by
applying principal components analysis and
specifying rotation. In the four tables, we have the
output of the factor analysis for this problem-the
communalities matrix, the total variance
explained matrix, the component matrix, and the
rotated component matrix. We assume the Eigen
values of that we are extracting as 1 or more.
The first step in interpreting the output is to look
at the factors extracted (from table 3), their Eigen
values and the cumulative percentage of variance.
we can see from the cumulative percentage
column that the 7 factors extracted together
account for 62.355 percent of the total variance
(information contained in the original 20
variables).This a pretty good bargain, because we
are able to economize on the number of variables,
while we lost only about 40% of the information
content.
Now the second task which follows is that of
interpreting what these 7 extracted factors
represent. This, we can accomplish by looking at
tables 3, 4 and 5, the component, rotated
component matrix and component transfor-
mation matrix.
05
By looking at table 5,the rotated factor matrix, we
notice that variables 12 and 13, service station and
ease of location have loadings -.884 and .758 on
factor 1 (we look for high loadings close to 1.00).
this suggests that factor 1 is a combination of these
two variables. From table 4 we get a different
picture here we loadings of commencement year
of the brand, maintenance cost and service
station with values of .572, .588, and .549,
respectively. This factor can therefore be
interpreted as- ‘accessibility’
Similarly for factor 2 we can see that table 5 shows
mileage and pick up have high loadings with
values .748 and .632, respectively. In table 4 there
is also a relation of design and model (.542) with
mileage. This factor could therefore be termed as
‘efficiency’.
In factor 3, table 5 depicts high loadings for
variables advertisement and positive behavior
of employees with values-.778and .708,
respectively. In table 4, we find a similar picture,
still popularity of the brand also has a high
loading value along with the above extracted
variables, therefore this factor may be termed as-
‘promotion of the brand’.
For factor 4, in table 5 we find that interior
designing of the car and design and model have
high loadings of .755 and .626,respectively. From
table 4 we did not see any loadings high enough to
be considered; therefore this factor may be
defined as- ‘design and structure’.
Factor 5 we see that 3 variables economic
recession, trust in brand loyalty and car loan
availability have high loadings of-.721, .682, and
.570, respectively from table 5. while table 4 does
not give a clear picture, hence we conclude that
‘economic environment’ is the right term for the
factor.
For factor 6 we see from table 5 that family size
and similar car available at lower cost by other
brand have high loadings-.579 and .384,
respectively. from table 4 we also see that positive
behavior of employees also have a high relation
with the two variable. Thus, this factor can be
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termed as ‘purchasing power’
Finally for factor 7 we find that frequency in
innovations and after sale services have high
loading of-.716 and .546, respectively, from table
5. While from table 4 we can include the variables
frequency in innovations and unique feature of
the brand to the above variables. These variables
combine together to name the factor as-
‘distinctiveness’.
Conclusions and Reccommendations
Every marketer makes efforts to create customer
delight by satisfying its customer in the best
possible way. This is the only strategy to maintain
brand loyalty among the customers. The
automobile industry competes within the
industry itself through the distinctive factors it
owns that attracts customers.
The above analysis bought us in contact with the
insights of the factors which might prove to be
fruitful for an automobile industry and improve
the brand’s loyalty. The few factors that were
revealed as responsible for brand preference are :
• Accessibility of the brand
• Efficiency of the automobile
• Advertisement and promotional efforts made
• Designing and structure
(both internal and external)
• Economic condition of a country
• Purchasing power of customers
• Distinctiveness of the brand
Each brand of car needs to improve on these
factors so as to improve their image in the eyes of
the customers.
There must be steps undertaken to make the
brand easily available to the customer so that the
customer doesn’t have to make special efforts to
locate the brand. Difficulty in accessing the brand
may lead to reduced sales.
There must be special attention taken to make the
car fuel efficient to ensure the customer smooth
and comfortable drive.Needs of those customers
who love speed should also be taken care of.
A brand will be made legitimate to the customers
through various advertisement campaigns.So
that the features, availability and quality of the
brand may be made known to the buyers, before
they decide on to make a purchase. The more a
product is promoted the more a customer
remembers about the brand and in this way the
brand gains popularity.
The car should have distinctive features to make it
a unique brand to be purchased. Also this gives
the automobile maker the monopoly power to
some extent (in terms of charging prices). Only a
distinct feature can make a brand stand out in
such a competitive market. The interior designing
and exterior designing could be the places
through which such distinct identity could be
given to a car. People should love the car when
they are inside it. After sale services along with
the positive behavior of employees may prove to
be adding on to the distinctive feature to the
brand.
Also when the economy is in recession the brand
preference of individuals may change because
they couldn’t afford the brand in such situations,
the sales may decrease and customers may no
longer be brand loyal. In such situations the
marketer should decide on price change to suit the
purchasing power of its customers. There should
be availability of cars for all types of family sizes
and for all income levels in a brand.
Thus, an auto car manufacturing company may
consider the above analyses and the various
suggestions while deciding on the various
marketing and distribution strategies. Creating
customer loyalty towards a brand is a tedious task
but if undertaken with a deep insight may prove
to be a delight for the company.
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